DTN Midday Livestock Comments

GENERAL COMMENTS:

Triple-digit pressure has developed in cattle trade once again Thursday morning with aggressive losses seen in feeder cattle markets and funneling through the live cattle complex. This is helping to draw additional uncertainty to the complex as traders remain extremely nervous. Hog markets were moderately lower through most of the morning, but have quickly eroded at midday as further pressure developed based on lack of commercial interest. Corn prices are lower in light trade. July corn futures are 3 cents higher. Stock markets are lower in light trade. The Dow Jones is 44 points lower while Nasdaq is down 24 points.

LIVE CATTLE:

Live cattle futures have backed away from session lows at midday, but prices are still holding triple digit losses as aggressive liquidation continues to develop across all contracts. There remains uncertainty through all cattle contracts with pressure in cash markets and futures traders quickly unwinding positions. June futures appear to be able to hold price levels at the $122 per cwt for the time being, but the nervousness seen in the complex and concern of cash market support may limit buyer interest late in the week. Cash cattle markets are generally quiet Thursday morning with bids seen at $138 live basis and $225 dressed basis. Given sales at these levels earlier in the week, this may be where overall price levels for the week may develop on cattle needing to be traded will remain, although feeders seem to be waiting for futures to stabilize given the firmness of beef values in the boxed beef cutout report during the morning. Asking prices are seen at $140 and higher live basis and $228 dressed basis. There have been some reports of some deferred delivery sales being done with prices around $220 per cwt. It is likely that additional active trade may be delayed until sometime Friday. Beef cut-outs at midday are higher, $2.66 higher (select) and up $2.81 per cwt (choice) with light movement of 63 total loads reported (36 loads of choice cuts, 11 loads of select cuts, 8 loads of trimmings, 8 loads of ground beef).

FEEDER CATTLE:

Continued widespread liquidation has redeveloped across feeder cattle futures as traders have hovered between $2.50 and $3.50 per cwt losses through most of the morning. This lack of support in the complex has not only affected feeder cattle futures, but quickly eroded interest in live cattle trade and is quickly pulling front month futures more than $12 per cwt off of recent highs sent last week. The aggressive nervous structure of the market is creating additional uncertainty through the entire market and could bring about even more pressure through the end of the week.

LEAN HOGS:

Moderate pressure has held in lean hog futures with the exception of May futures which continue to hold a strong 55 cent per cwt gain in light trade. The sharp losses across the cattle complex as well as pressure in hog fundamentals during the morning has eroded morning buyer support but still creating only limited pressure to recent gains. Lean hog futures are confined to a very narrow trading range with prices grouped from 30 to 40 cent losses in all nearby and deferred contracts as trade volume remains light as traders seem to be looking for any reason to step back into the complex through the end of the week. Cash prices are lower on the National Direct morning cash hog report. The weighted average price lost $0.89 at $68.53 per cwt with the range from $65.00 to $71.00 on 3,111 head reported sold. Cash prices are unreported due to confidentiality on the Iowa Minnesota Direct morning cash hog report. The National Pork Plant Report reported 157 loads selling with prices fell $0.29 per cwt. Lean hog index for 5/9 is at $67.64 up $1.66 with a projected two-day index of $69.12 down $1.48.

Rick Kment can be reached at rick.kment@dtn.com

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